The embattled owner of four Orange County hospitals has been fined $95,000 by the state for breaching a patient’s privacy in an effort to rebut a news article about the chain’s unusual and lucrative billing practices.

The Department of Public Health fined Shasta Regional Medical Center in Redding earlier this month after the patient’s medical records were disclosed without consent to three news agencies as well as hospital employees. The hospital is owned by Ontario-based Prime Healthcare Services, which also owns Garden Grove Hospital, La Palma Intercommunity, West Anaheim Medical Center and Huntington Beach Hospital.
Prime did not respond to requests for comment Thursday, but in a response filed with the state, hospital officials said they “did not agree with the findings.”

California Watch, a nonprofit investigative journalism website, published an article in December about the unusually high rate of kwashiorkor cases treated at Prime’s hospitals. Kwashiorkor is a form of malnutrition associated with starvation. Treating the condition commands a higher reimbursement rate from Medicare, according to the article, which was also published in The Orange County Register.

California Watch quoted Darlene Courtois, a 64-year-old overweight woman who was admitted to the Redding hospital after she was injured in a fall. The hospital, however, billed Medicare for treating her for kwashiorkor, California Watch reported.

“I never heard a doctor or nurse or any other medical personnel tell me I have kwashiorkor,” Courtois told the website.

Prime said at the time that she was properly diagnosed. Before the California Watch story was published, the hospital wrote a letter to California Watch that did not name Courtois, but cited information from her medical records, including lab results.

The state’s report refers to Courtois as “Patient 1.”

In one case, the hospital’s chief medical officer met with an editor from another news outlet and showed portions of her medical file in hopes of dissuading publication of California Watch’s article, the state report says.

A memo was also sent to all hospital employees rebutting the article and including the patient’s medical history. The memo did not disclose her name but referenced the California Watch article that named her.

Courtois told state investigators that she had not given the hospital permission to disclose her medical records.

The hospital was fined an additional $3,100 for failing to report the breach to the state and the patient.

Last year, California Watch reported that state public health officials dismissed citations against Prime over documentation of serious blood infections, but did not rule out the possibility of charges for billing fraud.

State officials were asked to investigate the hospitals after a union analysis found the nation’s highest rates of septicemia infections, which could indicate either a health crisis or billing fraud, at the hospitals. The report found that the national average for septicemia is a rate of 4.8 percent. Prime hospitals have an average rate of 15.7 percent.

Prime officials countered that they have higher rates because they treat sicker patients.